It’s December 2007. The Dow hovers around 14,000, and although real estate prices are starting to stagnate, the biggest issue for most small businesses in Oregon is that gasoline is starting to top $3 a gallon. It still seems like a fine time to start planning an expansion to your small Portland café, even if it will take more than a year to raise the money, build out, move into a better location and reopen the doors.

Fast-forward 16 months:

The economy is in the tank, the stock market has crashed, and consumers have seemingly stopped spending altogether.

Things are so bad here that the Legislature considers closing schools a month early.

And it’s against this backdrop that you’re finally ready to open the doors to your new restaurant.

So which is it?

If you answered “nightmare,” do not pass Go and do not collect $200. The right answer is that it’s a dream, a big, beautiful, bold dream.

Jennifer and JD Ray bought the cute, 800-square-foot Morningstar Café in downtown Portland about three years ago, based partly upon the wise words of their broker who said that real estate was not going to be a good investment for the next few years. The café had been around for years and the Rays figured that between JD’s high-tech job and Jen running the show, they could make their business a success.

And they did.

And if they did, so can you. Even in this economy. Even today.

Almost from the start of the Rays’ tenure as owners, the Morningstar Café improved. As Jennifer noted, “the previous owners had stopped putting the love into it.” The Rays fixed that, and a lot more:

They streamlined operations and organized the place properly.

They hired new, better employees, and took care of them.

They expanded the café’s offerings.

The café (www.morningstarcafe.com) became the kind of place where the food is delicious and the staff knows the names of the regulars. Business boomed and before long they decided to expand into a significantly bigger space. It only made sense; people loved the place. Were the Rays nervous? Not at all, says JD. “We feel so strongly about our business model that we are just very confident.”

So just what is that model that inspired such confidence, even in an economy as tough as this? It’s almost deceptive in its simplicity:

Offer a great product at a fair price.

And therein lies the lesson. It is indeed possible for small business in Oregon to not only survive, but thrive and grow, even in an economy where unemployment tops 12%.

Here are the lessons from JD and Jennifer:

1. Know your customers: In this economy, you simply have to know what it is your customers want, what they are like and what they like. For the Morningstar Café this means that the new restaurant will offer fresh, local, mostly organic food. “A TGI Fridays would never make it in downtown Portland,” JD wisely notes.

2. Customer service must be more than a motto: Most small businesses know, either actually or instinctively, that it costs five times as much to create a new customer as it does to keep a current one. So one of the smartest, most cost-effective things you can do to keep your business going is to take care of your best customers.

This also means using the 80-20 rule to your advantage. Figure out which 20% of your customers create 80% of your income, and take great care of them.

3. Price it right: In this economic climate, what people want, maybe more than anything, is value. You simply must give people more than they expect for their dollar.

If this seems like advice you have seen before, it probably is, and that’s just fine. Now is the time to go back to basics.

Do that and who knows, the next dream business may just be yours.

Steve Strauss is the small business columnist for USATODAY.com and the author of The Small Business Bible. He lives in Portland, and can be reached at
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. You can join the discussion of small business topics at his blog on oregonbusiness.com/steve.

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